Lack of CSR in non-exporting industries hinders efficiency

LAHORE: CSR Corporate social responsibility in Pakistan is restricted to exporting industries, multinational companies, and few large domestic companies, covering hardly five percent of the total workforce of the country.

The companies with better CSR are flourishing, while the remaining companies are decaying and have poor performance. Pakistani planners pay little attention towards empowering the workers with health, education, safety and security. The CSR compliant companies look after all these aspects of their workers and even their families.

They encourage them to upgrade their skills through not only on job training but also by financing their refreshers and upgrade courses. Social compliance does not only mean abiding by the laws of the country about labour, but genuinely looking after their welfare.

That our labour laws are outdated can be judged by the fact that the exporting industries are compelled by the foreign buyers of their products to provide more facilities to their workers besides obeying all labour laws of the country.

Our labour laws are restricted to minimum wage, social security contributions by the employer on behalf of workers, and double overtime if worked beyond duty hours. The right to form union is another ‘benefit’ provided to the workers.

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The unions have practically failed as the employers openly violate the labour laws, while ‘pocket unions’ ignore them. Pakistani laws are too weak and the regulators of these laws are even weaker. There is no law about the working conditions in a factory.

The workers are forced to perform duties in dim light and inadequate aeration to save electricity bill, though their corporate offices are flooded with lights and cooled with air conditioners. Few non-exporting factories have fire escape routes.

The workers are not paid overtime. In few instances, they are paid equivalent to their hourly wage, but are made to sign vouchers for double overtime. Another practice largely in vogue is that if a worker does not attend the duty without leave application, a day’s wage is deducted.

But in case of overtime he has to apply for it. The same department that maintains the attendance record also maintains the overtime record, but does not automatically pay the worker unless he applies for it.

One reason that the productivity in non-exporting industries is much lower than the productivity in exporting industries is this difference in treatment of workers by the two industrial segments. The exporting industries were forced by the foreign buyers from developed economies to give respect to their workers and treat them humanly.

The exporters initially termed this condition as a kind of trade barrier to increase their cost, but since the export orders were subject to social compliance dictated by the buyers they had no choice.

With the passage of time, they realised that though their expenditure increased due to social compliance but their profits and efficiencies increased much more. The exporters were forbidden to engage child labour. They were compelled to construct enough clean toilets for the workers.

They were asked not to throw industrial waste in the open drains but establish water treatment plants and throw the waste after proper treatment. They were asked to keep working floors neat, properly lighted and well air rated. They were forced to designate fire escape routes through illuminated arrows.

For their women workers they were advised to establish day care centres for children. In-house clinics ensured better health of workers that are periodically screened for any health problem.

Exporters established fair price shops for their workers and provide them subsidised meals during duty hours. These compliances have a cost, but it relieved the workers from many day to day worries.

The workers become regular and leave applications declined appreciably, the productivity increased, the workers started treasuring their jobs and started working with dedication.

They started owning the vision of the company and productivity increased much beyond the imagination of the factory owners. Higher productivity brought down costs and profits increased.

The social compliance in exporting industries was made possible due to strict accountability ensured by the buyers. Foreign buyer’s auditors visit the premises of their Pakistani suppliers.

They meet workers, officials of the company, check records and if any deviation from social compliance is detected the company is heavily fined and in some cases it is blacklisted.

There have been instances when exporting firms were forced to pay overtime to workers amounting to millions of rupees. Even the employees that left the job were called in presence of auditors and their dues were cleared.

(This news/article originally appeared in The News on September 4th, 2018)